Today Hits an Anti-Corporate Gusher

NBCs Today on October 27 indicted oil companies for profits that
reporters and their sources considered too high. The story urged
companies to reinvest their money into building new refineries,
without explaining why they havent recently.

Katie Couric said that one mans pain is another mans pleasure,
and the report that followed accused oil companies of subjecting
consumers to pain at the gas pump while enjoying their own profit
pleasure. Anne Thompson stated that while American consumers have
suffered through months of record high gas prices, the oil companies
have hit a gusher. She later said news of these gargantuan numbers
is sure to ignite the debate over how much is too much in a time of
crisis.

Companies profits vary greatly from one quarter to the next; it is
part of the business cycle. Americas free market allows businesses
to prosper as well as they are able, without the government or any
other body dictating when a company has made too much. And not all
profits remain with the company for example, Exxon Mobil Corp.
shares profits with more than 2.5 million individual shareholders,
in addition to institutional shareholders. According to Exxon
Mobils
web site, in 2004
Exxon returned nearly $15 billion to shareholders in dividends and
share buybacks. Thats quite a different picture than the one
Thompson painted of a centralized corporation hoarding profits.

Thompson also didnt mention that an increase of profits will
increase supply, which will in turn decrease prices. As of October
27, the price of gasoline had fallen every business day since
October 6, dropping 37 cents per gallon in that time span to 3 cents
lower than when Hurricane Katrina struck.

To strengthen her sentiments, Thompson interviewed Jamie Court from
the Foundation for Taxpayer and Consumer Rights, who accused oil
companies of manipulating the oil supply to make money. She
identified Court as a consumer advocate, without detailing the
anti-industry position of his organization. The Foundations Web
site, which calls for a government-mandated freeze on gas prices,
claims that Neither ExxonMobil nor the industry has opened a new
refinery since 1976 because the companies know keeping refined
supply low is a recipe for huge profits. If the White House and
Congress don't act to force ExxonMobil to invest in refining
capacity after Katrina's lessons, the public might as well clean out
that tank and refill it with new blood.

Court repeated that accusation on Today, saying that an industry
like the oil industry knows that if it just has bare minimum to meet
demand, that any shock to the system will drive their prices and
their profits up. Today did not mention anything about the group
or what exactly they advocate and Thompson didnt allow an oil company
spokesman to answer the charge.

Following Courts views, Thompson failed to explain why oil
companies have not built new refineries recently. She said only that
the plants that turn oil into gasoline and heating fuel have a huge
public relations problem. Oil companies cant expand readily and
build more refineries due to governmental restraints that add to
construction costs. The industry has spent more than $47 billion to
comply with environmental regulations over the past 10 years.

Ted Robbins of National Public Radio could
have filled in some background for Thompson.
He did a story in June on Arizona Clean Fuels, the company
trying to build the first refinery in the United States since 1976.
The CEO, Glenn McGinnis, stated that its pollution will be less
than half of the best refinery in the world today on a per barrel
basis. Despite that fact, Arizona Clean Fuels had to wait five
years to get
air quality permits.
Robbins also interviewed Larry Goldstein of the Petroleum Industry
Research Foundation. Robbins quoted Goldstein as stating that
theres not much oil money left to invest, thats because intense
competition and slim profit margins have forced a lot of small
refiners out of business. And the remaining larger refiners have a
lot of debt.

Thompson didnt mention any of those issues facing refineries,
although she interviewed Gary Ross, the CEO of PIRA Energy Group, a
global energy consulting firm. He said that nobody wants a refinery
in their backyard.

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